[Federal Register: November 30, 2004 (Volume 69, Number 229)]
[Proposed Rules]
[Page 69573-69578]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30no04-29]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 51
[WC Docket No. 02-78; FCC 04-252]
Petition of Mid-Rivers Telephone Cooperative, Inc. for Order
Declaring It To Be an Incumbent Local Exchange Carrier in Terry, MT
Pursuant to Section 251(h)(2)
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This Notice of Proposed Rulemaking (NPRM) solicits comment on
the application of section 251(h)(2) of the Communications Act of 1934,
as amended, regarding the reclassification of competitive local
exchange carriers (LECs) to incumbent LECs. Mid-Rivers Telephone
Cooperative, Inc. (Mid-Rivers) filed a petition to be classified as an
incumbent LEC. The Commission makes tentative conclusions addressing
Mid-Rivers petition in part and poses questions concerning the
application of section 251(h)(2) in Mid-Rivers case, as well as other
similar cases.
DATES: Comments are due on or before December 30, 2004, and reply
comments are due on or before January 14, 2005.
ADDRESSES: Federal Communications Commission, 445 12th Street, SW.,
Washington, DC 20554. See SUPPLEMENTARY INFORMATION for further filing
instructions.
FOR FURTHER INFORMATION CONTACT: Ian Dillner, Attorney, Competition
Policy Division, Wireline Competition Bureau, at (202) 418-1191, or at
Ian.Dillner@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking in WC Docket No. 02-78, adopted October 21,
2004, and released November 15, 2004 (NPRM). The complete text of this
NPRM is available for inspection and copying during normal business
hours in the FCC Reference Information Center, Portals II, 445 12th
Street, SW., Room CY-A257, Washington, DC 20554. This document may also
be purchased from the Commission's duplicating contractor, Best Copy
and Printing, Inc., Portals II, 445 12th Street, SW., Room CY-B402,
Washington, DC 20554, telephone 1-800-378-3160. It is also available on
the Commission's Web site at http://www.fcc.gov.
Comments may be filed using the Commission's Electronic Comment
Filing System (ECFS) or by filing paper copies. All filings should
refer to WC Docket No. 02-78. Comments filed through ECFS can be sent
as an electronic file via the Internet at http://www.fcc.gov/e-file/ecfs.html.
Only one copy of an electronic submission must be filed. In
completing the transmittal screen, commenters should include their full
name, postal service mailing address, and the applicable docket number,
which in this instance is WC Docket No. 02-78. Parties may also submit
an electronic comment by Internet e-mail. To get filing instructions
for e-mail comments, commenters should send an e-mail to
ecfshelp@fcc.gov, and should include the following words in the
regarding line of the message: ``get form.'' A
sample form and directions will be sent in reply.
Parties who choose to file by paper must file an original and four
copies of each filing. Parties filing by paper must also send three (3)
courtesy copies to the attention of Janice M. Myles, Wireline
Competition Bureau, Competition Policy Division, 445 12th Street, SW.,
Suite 5-C327, Washington, DC 20554, or via e-mail janice.myles@fcc.gov.
Paper filings and courtesy copies must be delivered in the following
manner. Filings can be sent by hand or messenger delivery, by
commercial overnight courier, or by first-class or overnight U.S.
Postal Service mail (although we continue to experience delays in
receiving U.S. Postal Service mail).
The Commission's contractor, Natek, Inc., will receive hand-
delivered or messenger-delivered paper filings for the Commission's
Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC
20002. The filing hours at this location are 8 a.m. to 7 p.m. All hand
deliveries must be held together with rubber bands or fasteners. Any
envelopes must be disposed of before entering the building. This
facility is the only location where hand-delivered or messenger-
delivered paper filings or courtesy copies for the Commission's
Secretary and Commission staff will be accepted. Commercial overnight
mail (other than U.S. Postal Service Express Mail and Priority Mail)
must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
U.S. Postal Service first-class mail, Express Mail, and Priority Mail
should be addressed to 445 12th Street, SW., Washington, DC 20554.
All filings must be addressed to the Commission's Secretary, Office
of the Secretary, Federal Communications Commission.
Each comment and reply comment must include a short and concise
summary of the substantive arguments raised in the pleading. Comments
and reply comments must also comply with section 1.48 and all other
applicable sections of the Commission's rules. We direct all interested
parties to include the name of the filing party and the date of the
filing on each page of their comments and reply comments. All parties
are encouraged to utilize a table of contents, regardless of the length
of their submission.
Synopsis of the Notice of Proposed Rulemaking
1. Background. Mid-Rivers Telephone Cooperative, Inc. (Mid-Rivers),
a competitive LEC in the Terry, Montana exchange, filed a petition with
the Commission requesting classification as an incumbent LEC in the
Terry exchange pursuant to section 251(h)(2) of the Communications Act
of 1934, as amended (the Act or Communication Act). This provision
allows the Commission to determine ``by rule'' to treat a competitive
LEC as an incumbent LEC if it satisfies a three-prong test: (1) The
carrier occupies a market position comparable to an incumbent LEC; (2)
the carrier has ``substantially replaced'' an incumbent LEC, and; (3)
the reclassification serves the public interest, convenience, and
necessity. 47 U.S.C. 251(h)(2).
2. Mid-Rivers, also an incumbent LEC in a nearby exchange, filed
this petition as a result of its success in acquiring approximately 93
percent of the access
[[Page 69574]]
lines in the Terry exchange, almost exclusively on its own facilities.
Mid-Rivers asserts that it should be classified as an incumbent LEC.
Mid-Rivers' petition is supported by several parties, but also is
opposed by two parties.
3. Notice of Proposed Rulemaking. For Mid-Rivers to be treated as
an incumbent LEC, the Commission must first find that it ``occupies a
position in the market for telephone exchange service with an area that
is comparable to the position occupied by [an incumbent LEC]''. 47
U.S.C. 251(h)(2)(A). The Commission seeks comment on how to define the
relevant ``area'' under section 251(h)(2)(A). Assuming that the Terry
exchange is the relevant ``area,'' the Commission tentatively concludes
that Mid-Rivers satisfies the first prong of the statutory standard,
based on their provisioning of facilities based service to 93 percent
of the exchange.
4. The second prong of section 251(h)(2)(B) requires a showing that
Mid-Rivers has ``substantially replaced'' an incumbent LEC. 47 U.S.C.
251(h)(2)(B). The Commission set out a standard for fulfilling this
requirement in the Guam Declaratory Ruling and NPRM, where the
applicant LEC provides services ``to all or virtually all'' of the
subscribers in the area. 62 FR 29320-01, adopted, 63 FR 42275-01.
Again, assuming the relevant ``area'' is the Terry exchange, the
Commission tentatively concludes that Mid-Rivers has ``substantially
replaced'' Qwest, based on its 93 percent share of the exchange,
satisfying section 251(h)(2)(B). 47 U.S.C. 251(h)(2)(B).
5. Additionally, the Commission seeks comment on whether the
requested classification will fulfill the ``public interest,
convenience, and necessity'' requirements under 251(h)(2)(C). As part
of this inquiry, we also seek comment on the benefits of advanced
services provided by Mid-Rivers and on whether the public interest is
satisfied, possibly including consideration of broader market
conditions. We also seek comment on the significance of universal
service concerns, including possible effects on high-cost universal
service support. Further, we seek comment on the relevance of access
charge issues to the public interest analysis.
6. Another consideration, which the Mid-Rivers petition does not
discuss, is the subsequent regulatory treatment of Qwest, as Qwest
still fits the literal definition of an incumbent LEC. Because this is
a novel issue for the Commission, and section 251(h) is silent on the
matter, we seek comment on what regulatory treatment is appropriate for
legacy incumbent LECs. Furthermore, the Commission seeks comment on
whether automatic reclassification of the legacy incumbent LEC is an
appropriate result of reclassifying the competitive LEC. The Commission
also requests comment on whether two incumbent LECs can co-exist in an
exchange, and the implications this would have on the current
implementation of the Act including, universal service, and other rules
predicated on a single incumbent LEC per area. The Commission has
authority under section 10 of the Act to forbear from certain
requirements and seeks comments on whether this is the required
mechanism to address the situation.
7. Finally, the Commission seeks to develop a record on other
considerations regarding this petition. We seek comment on whether
revised Commission rules might resolve this situation. We also seek
comment on current market trends that are related to this issue, and
what underlying market and regulatory motivations are driving such a
trend. We seek further comment on the process the Commission should use
to address any further applications of this type. If the record
indicates that a number of similar carriers are interested in filing
similar applications, we seek comment on whether and how to administer
an efficient process.
Paperwork Reduction Act
8. This NPRM does not contain proposed information collection(s)
subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-
13. In addition, therefore, it does not contain any proposed
``information collection burden for small business concerns with fewer
than 25 employees,'' pursuant to the Small Business Paperwork Relief
Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).
Initial Regulatory Flexibility Analysis
9. As required by the RFA, the Commission has prepared this IRFA of
the possible significant economic impact on a substantial number of
small entities by the policies and rules proposed in this NPRM. Written
public comments are sought on this IRFA. Comments must be identified as
responses to the IRFA and must be filed by the deadlines for comments
on the NPRM. The Commission will send a copy of the NPRM, including
this IRFA, to the Chief Counsel for SBA Advocacy.
1. Need for, and Objectives of, the Proposed Rules
10. The Commission initiates this rulemaking proceeding because the
Mid-Rivers' petition raises novel and difficult questions implicating
several of the Commission's major policies affecting LECs of all sizes,
including local competition, universal service, and access charges. In
this proceeding, we seek comment on whether Mid-Rivers satisfies the
requirements of section 251(h)(2) to be classified as an incumbent LEC
in Terry, Montana. To this end, the Commission makes tentative
conclusions that Mid-Rivers satisfies the first two statutory prongs of
section 251(h)(2). However, the Commission will weigh these tentative
conclusions against the alternative possibility that Mid-Rivers does
not satisfy the standards set forth in the Act. The Commission also
plans to consider whether the petition satisfies the third prong of
section 251(h)(2)--the public interest standard--and will weigh the
benefits of granting the application against other considerations, such
as the impact on other major Commission policies. Furthermore, the
Commission plans to review: (1) The subsequent regulatory treatment of
Qwest, including whether two incumbent LECs can serve the same
exchange, and whether the Commission is authorized to reclassify Qwest
as a competitive LEC; (2) whether the Act permits expected future
applications of this type to be decided by final order rather than by
rulemaking; and (3) the appropriate regulatory requirements for
classification changes such as these. Thus, we ask interested parties
to address how the Commission can best balance its objective to advance
local competition and other policy goals within the existing statutory
and regulatory framework. The Commission also plans to consider the
various alternative approaches, as described in the Notice of Proposed
Rulemaking.
2. Legal Basis
11. The legal basis for any action that may be taken pursuant to
this Notice is contained in sections 4, 10, 201-202, 214, 303 and 403
of the Communications Act of 1934, as amended, 47 U.S.C. 154, 160, 201-
204, 214, 303, and 403, section 706 of the Telecommunications Act of
1996, 47 U.S.C. 157nt, and Sec. Sec. 1.1, 1.48, 1.411, 1.412, 1.415,
1.419, and 1.1200-1.1216, of the Commission's rules, 47 CFR 1.1, 1.48,
1.411, 1.412, 1.415, 1.419, and 1.1200-1.1216.
3. Description and Estimate of the Number of Small Entities To Which
the Proposed Rules Would Apply
12. The RFA directs agencies to provide a description of, and,
where feasible, an estimate of, the number of
[[Page 69575]]
small entities that may be affected by the rules adopted herein. The
RFA generally defines the term ``small entity'' as having the same
meaning as the terms ``small business,'' ``small organization,'' and
``small governmental jurisdiction.'' In addition, the term ``small
business'' has the same meaning as the term ``small business concern''
under the Small Business Act. A ``small business concern'' is one
which: (1) Is independently owned and operated; (2) is not dominant in
its field of operation; and (3) satisfies any additional criteria
established by the Small Business Administration (SBA).
13. In this section, we further describe and estimate the number of
small entity licensees and regulatees that may be affected by rules
adopted in this Order. The most reliable source of information
regarding the total numbers of certain common carrier and related
providers nationwide, as well as the number of commercial wireless
entities, appears to be the data that the Commission publishes in its
Trends in Telephone Service report. The SBA has developed small
business size standards for wireline and wireless small businesses
within the three commercial census categories of Wired
Telecommunications Carriers, Paging, and Cellular and Other Wireless
Telecommunications. Under these categories, a business is small if it
has 1,500 or fewer employees. Below, using the above size standards and
others, we discuss the total estimated numbers of small businesses that
might be affected by our actions.
14. We have included small incumbent local exchange carriers in
this present RFA analysis. As noted above, a ``small business'' under
the RFA is one that, inter alia, meets the pertinent small business
size standard (e.g., a telephone communications business having 1,500
or fewer employees), and ``is not dominant in its field of operation.''
The SBA's Office of Advocacy contends that, for RFA purposes, small
incumbent local exchange carriers are not dominant in their field of
operation because any such dominance is not ``national'' in scope. We
have therefore included small incumbent local exchange carriers in this
RFA analysis, although we emphasize that this RFA action has no effect
on Commission analyses and determinations in other, non-RFA contexts.
15. Wired Telecommunications Carriers. The SBA has developed a
small business size standard for Wired Telecommunications Carriers,
which consists of all such companies having 1,500 or fewer employees.
According to Census Bureau data for 1997, there were 2,225 firms in
this category, total, that operated for the entire year. Of this total,
2,201 firms had employment of 999 or fewer employees, and an additional
24 firms had employment of 1,000 employees or more. Thus, under this
size standard, the great majority of firms can be considered small.
16. Incumbent Local Exchange Carriers (LECs). Neither the
Commission nor the SBA has developed a small business size standard
specifically for incumbent local exchange services. The appropriate
size standard under SBA rules is for the category Wired
Telecommunications Carriers. Under that size standard, such a business
is small if it has 1,500 or fewer employees. According to Commission
data, 1,310 carriers have reported that they are engaged in the
provision of incumbent local exchange services. Of these 1,310
carriers, an estimated 1,025 have 1,500 or fewer employees and 285 have
more than 1,500 employees. Consequently, the Commission estimates that
most providers of incumbent local exchange service are small businesses
that may be affected by our proposed action.
17. Competitive Local Exchange Carriers (CLECs), Competitive Access
Providers (CAPs), ``Shared-Tenant Service Providers,'' and ``Other
Local Service Providers.'' Neither the Commission nor the SBA has
developed a small business size standard specifically for these service
providers. The appropriate size standard under SBA rules is for the
category Wired Telecommunications Carriers. Under that size standard,
such a business is small if it has 1,500 or fewer employees. According
to Commission data, 563 carriers have reported that they are engaged in
the provision of either competitive access provider services or
competitive local exchange carrier services. Of these 563 carriers, an
estimated 472 have 1,500 or fewer employees and 91 have more than 1,500
employees. In addition, 14 carriers have reported that they are
``Shared-Tenant Service Providers,'' and all 14 are estimated to have
1,500 or fewer employees. In addition, 37 carriers have reported that
they are ``Other Local Service Providers.'' Of the 37, an estimated 36
have 1,500 or fewer employees and one has more than 1,500 employees.
Consequently, the Commission estimates that most providers of
competitive local exchange service, competitive access providers,
``Shared-Tenant Service Providers,'' and ``Other Local Service
Providers'' are small entities that may be affected by our proposed
action.
18. Interexchange Carriers (IXCs). Neither the Commission nor the
SBA has developed a small business size standard specifically for
providers of interexchange services. The appropriate size standard
under SBA rules is for the category Wired Telecommunications Carriers.
Under that size standard, such a business is small if it has 1,500 or
fewer employees. According to Commission data, 281 carriers have
reported that they are engaged in the provision of interexchange
service. Of these, an estimated 254 have 1,500 or fewer employees and
27 have more than 1,500 employees. Consequently, the Commission
estimates that the majority of IXCs are small entities that may be
affected by our proposed action.
19. Operator Service Providers (OSPs). Neither the Commission nor
the SBA has developed a small business size standard specifically for
operator service providers. The appropriate size standard under SBA
rules is for the category Wired Telecommunications Carriers. Under that
size standard, such a business is small if it has 1,500 or fewer
employees. According to Commission data, 23 carriers have reported that
they are engaged in the provision of operator services. Of these, an
estimated 22 have 1,500 or fewer employees and one has more than 1,500
employees. Consequently, the Commission estimates that the majority of
OSPs are small entities that may be affected by our proposed action.
20. Prepaid Calling Card Providers. The SBA has developed a size
standard for a small business within the category of Telecommunications
Resellers. Under that SBA size standard, such a business is small if it
has 1,500 or fewer employees. According to Commission data, 32
companies reported that they were engaged in the provision of prepaid
calling cards. Of these 32 companies, an estimated 31 have 1,500 or
fewer employees and one has more than 1,500 employees. Consequently,
the Commission estimates that the great majority of prepaid calling
card providers are small entities that may be affected by the rules and
policies adopted herein.
21. Other Toll Carriers. Neither the Commission nor the SBA has
developed a size standard for small businesses specifically applicable
to ``Other Toll Carriers.'' This category includes toll carriers that
do not fall within the categories of interexchange carriers, OSPs,
prepaid calling card providers, satellite service carriers, or toll
resellers. The closest applicable size standard under SBA rules is for
Wired Telecommunications Carriers. Under that size standard, such a
business is
[[Page 69576]]
small if it has 1,500 or fewer employees. According to Commission's
data, 65 companies reported that their primary telecommunications
service activity was the provision of other toll services. Of these 65
companies, an estimated 62 have 1,500 or fewer employees and three have
more than 1,500 employees. Consequently, the Commission estimates that
most ``Other Toll Carriers'' are small entities that may be affected by
the rules and policies adopted herein.
22. Wireless Service Providers. The SBA has developed a small
business size standard for wireless firms within the two broad economic
census categories of ``Paging'' and ``Cellular and Other Wireless
Telecommunications.'' Under both SBA categories, a wireless business is
small if it has 1,500 or fewer employees. For the census category of
Paging, Census Bureau data for 1997 show that there were 1,320 firms in
this category, total, that operated for the entire year. Of this total,
1,303 firms had employment of 999 or fewer employees, and an additional
17 firms had employment of 1,000 employees or more. Thus, under this
category and associated small business size standard, the great
majority of firms can be considered small. For the census category
Cellular and Other Wireless Telecommunications, Census Bureau data for
1997 show that there were 977 firms in this category, total, that
operated for the entire year. Of this total, 965 firms had employment
of 999 or fewer employees, and an additional 12 firms had employment of
1,000 employees or more. Thus, under this second category and size
standard, the great majority of firms can, again, be considered small.
Broadband PCS. The broadband PCS spectrum is divided into six frequency
blocks designated A through F, and the Commission has held auctions for
each block. The Commission defined ``small entity'' for Blocks C and F
as an entity that has average gross revenues of $40 million or less in
the three previous calendar years. For Block F, an additional
classification for ``very small business'' was added and is defined as
an entity that, together with its affiliates, has average gross
revenues of not more than $15 million for the preceding three calendar
years.'' These standards defining ``small entity'' in the context of
broadband PCS auctions have been approved by the SBA. No small
businesses, within the SBA-approved small business size standards bid
successfully for licenses in Blocks A and B. There were 90 winning
bidders that qualified as small entities in the Block C auctions. A
total of 93 small and very small business bidders won approximately 40
percent of the 1,479 licenses for Blocks D, E, and F. On March 23,
1999, the Commission re-auctioned 347 C, D, E, and F Block licenses.
There were 48 small business winning bidders. On January 26, 2001, the
Commission completed the auction of 422 C and F Broadband PCS licenses
in Auction No. 35. Of the 35 winning bidders in this auction, 29
qualified as ``small'' or ``very small'' businesses. Subsequent events,
concerning Auction 305, including judicial and agency determinations,
resulted in a total of 163 C and F Block licenses being available for
grant. In addition, we note that, as a general matter, the number of
winning bidders that qualify as small businesses at the close of an
auction does not necessarily represent the number of small businesses
currently in service. Also, the Commission does not generally track
subsequent business size unless, in the context of assignments or
transfers, unjust enrichment issues are implicated.
23. Narrowband Personal Communications Services. The Commission
held an auction for Narrowband PCS licenses that commenced on July 25,
1994, and closed on July 29, 1994. A second auction commenced on
October 26, 1994 and closed on November 8, 1994. For purposes of the
first two Narrowband PCS auctions, ``small businesses'' were entities
with average gross revenues for the prior three calendar years of $40
million or less. Through these auctions, the Commission awarded a total
of 41 licenses, 11 of which were obtained by four small businesses. To
ensure meaningful participation by small business entities in future
auctions, the Commission adopted a two-tiered small business size
standard in the Narrowband PCS Second Report and Order. 65 FR 35875,
June 6, 2000. A ``small business'' is an entity that, together with
affiliates and controlling interests, has average gross revenues for
the three preceding years of not more than $40 million. A ``very small
business'' is an entity that, together with affiliates and controlling
interests, has average gross revenues for the three preceding years of
not more than $15 million. The SBA has approved these small business
size standards. A third auction commenced on October 3, 2001 and closed
on October 16, 2001. Here, five bidders won 317 (Metropolitan Trading
Areas and nationwide) licenses. Three of these claimed status as a
small or very small entity and won 311 licenses.
24. Specialized Mobile Radio. The Commission awards ``small
entity'' bidding credits in auctions for Specialized Mobile Radio (SMR)
geographic area licenses in the 800 MHz and 900 MHz bands to firms that
had revenues of no more than $15 million in each of the three previous
calendar years. The Commission awards ``very small entity'' bidding
credits to firms that had revenues of no more than $3 million in each
of the three previous calendar years. The SBA has approved these small
business size standards for the 900 MHz Service. The Commission has
held auctions for geographic area licenses in the 800 MHz and 900 MHz
bands. The 900 MHz SMR auction began on December 5, 1995, and closed on
April 15, 1996. Sixty bidders claiming that they qualified as small
businesses under the $15 million size standard won 263 geographic area
licenses in the 900 MHz SMR band. The 800 MHz SMR auction for the upper
200 channels began on October 28, 1997, and was completed on December
8, 1997. Ten bidders claiming that they qualified as small businesses
under the $15 million size standard won 38 geographic area licenses for
the upper 200 channels in the 800 MHz SMR band. A second auction for
the 800 MHz band was held on January 10, 2002 and closed on January 17,
2002 and included 23 BEA licenses. One bidder claiming small business
status won five licenses.
25. 39 GHz Service. The Commission created a special small business
size standard for 39 GHz licenses--an entity that has average gross
revenues of $40 million or less in the three previous calendar years.
An additional size standard for ``very small business'' is: An entity
that, together with affiliates, has average gross revenues of not more
than $15 million for the preceding three calendar years. The SBA has
approved these small business size standards. The auction of the 2,173
39 GHz licenses began on April 12, 2000 and closed on May 8, 2000. The
18 bidders who claimed small business status won 849 licenses.
Consequently, the Commission estimates that 18 or fewer 39 GHz
licensees are small entities that may be affected by the rules and
polices proposed herein.
26. Multipoint Distribution Service, Multichannel Multipoint
Distribution Service, and Instructional Television Fixed Service.
Multichannel Multipoint Distribution Service (MMDS) systems, often
referred to as ``wireless cable,'' transmit video programming to
subscribers using the microwave frequencies of the Multipoint
[[Page 69577]]
Distribution Service (MDS) and Instructional Television Fixed Service
(ITFS). In connection with the 1996 MDS auction, the Commission defined
``small business'' as an entity that, together with its affiliates, has
average gross annual revenues that are not more than $40 million for
the preceding three calendar years. The SBA has approved of this
standard. The MDS auction resulted in 67 successful bidders obtaining
licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67
auction winners, 61 claimed status as a small business. At this time,
we estimate that of the 61 small business MDS auction winners, 48
remain small business licensees. In addition to the 48 small businesses
that hold BTA authorizations, there are approximately 392 incumbent MDS
licensees that have gross revenues that are not more than $40 million
and are thus considered small entities.
27. In addition, the SBA has developed a small business size
standard for Cable and Other Program Distribution, which includes all
such companies generating $12.5 million or less in annual receipts.
According to Census Bureau data for 1997, there were a total of 1,311
firms in this category, total, that had operated for the entire year.
Of this total, 1,180 firms had annual receipts of under $10 million,
and an additional 52 firms had receipts of $10 million or more but less
than $25 million. Consequently, we estimate that the majority of
providers in this service category are small businesses that may be
affected by the proposed rules and policies.
28. Finally, while SBA approval for a Commission-defined small
business size standard applicable to ITFS is pending, educational
institutions are included in this analysis as small entities. There are
currently 2,032 ITFS licensees, and all but 100 of these licenses are
held by educational institutions. Thus, we tentatively conclude that at
least 1,932 ITFS licensees are small businesses.
29. Incumbent 24 GHz Licensees. This analysis may affect incumbent
licensees who were relocated to the 24 GHz band from the 18 GHz band,
and applicants who wish to provide services in the 24 GHz band. The
applicable SBA small business size standard is that of ``Cellular and
Other Wireless Telecommunications'' companies. This category provides
that such a company is small if it employs no more than 1,500 persons.
According to Census Bureau data for 1997, there were 977 firms in this
category, total, that operated for the entire year. Of this total, 965
firms had employment of 999 or fewer employees, and an additional 12
firms had employment of 1,000 employees or more. Thus, under this size
standard, the great majority of firms can be considered small. These
broader census data notwithstanding, we believe that there are only two
licensees in the 24 GHz band that were relocated from the 18 GHz band,
Teligent and TRW, Inc. It is our understanding that Teligent and its
related companies have less than 1,500 employees, though this may
change in the future. TRW is not a small entity. Thus, only one
incumbent licensee in the 24 GHz band is a small business entity.
30. Future 24 GHz Licensees. With respect to new applicants in the
24 GHz band, we have defined ``small business'' as an entity that,
together with controlling interests and affiliates, has average annual
gross revenues for the three preceding years not exceeding $15 million.
``Very small business'' in the 24 GHz band is defined as an entity
that, together with controlling interests and affiliates, has average
gross revenues not exceeding $3 million for the preceding three years.
The SBA has approved these definitions. The Commission will not know
how many licensees will be small or very small businesses until the
auction, if required, is held.
4. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements
31. The Commission in this Notice of Proposed Rulemaking makes
tentative conclusions as to some, but not all of the necessary
requirements of section 251(h)(2) for a competitive LEC, Mid-Rivers, to
be declared an incumbent LEC. Should the Commission decide to find,
after reviewing the record, that Mid-Rivers satisfies the requirements
of section 251(h)(2) to be declared an incumbent LEC, and should the
Commission make a finding as to the appropriate regulatory
classification of the legacy incumbent LEC Qwest, the filing and
compliance requirements of both Mid-Rivers and Qwest could potentially
change. This is because incumbent LEC status often entails additional
regulatory obligation and our decision on how to treat the legacy
incumbent LEC could reduce Qwest's regulatory obligation. The
Commission seeks comment in this Notice of Proposed Rulemaking
regarding what, if any, broadly applicable rules would be necessary to
properly implement this provision of the Act. Without more certainty
about what rules, if any, the Commission will choose to adopt, we
cannot accurately estimate the cost of compliance by small carriers. We
therefore seek comment on the types of burdens carriers could face if
the proposed recommendations are adopted. Entities, especially small
businesses, are encouraged to quantify, if possible, the costs and
benefits of potential reporting, recordkeeping, and other compliance
requirements.
5. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
32. The RFA requires an agency to describe any significant,
specifically small business, alternatives that it has considered in
reaching its proposed approach, which may include the following four
alternatives (among others): (1) The establishment of differing
compliance or reporting requirements or timetables that take into
account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use
of performance, rather than design, standards; and (4) an exemption
from coverage of the rule, or any part thereof, for small entities.
33. While the Commission's primary concern is to implement the
provisions of the Act, the Commission also plans to evaluate any
adverse effect that its review of issues in this proceeding will have
on small business entities. Our tentative conclusions that Mid-Rivers
satisfies two of the three prongs of the statutory standard apply
irrespective of the petitioner's size. However, some of the regulations
and obligations that pertain to the incumbent LEC status that Mid-
Rivers seeks are, by statute, limited in many circumstances because the
Act exempts certain small incumbent local exchange telephone companies
from the significant obligations of section 251(c). Thus, because Mid-
Rivers qualifies for the exemption because of its small size, if our
tentative conclusions are adopted as a part of an order granting the
relief requested by Mid-Rivers, it is most likely that Mid-Rivers will
not be subject to many of the costly regulations that generally pertain
to incumbent LECs. Finally, we also consider procedural mechanisms
that, if warranted, could potentially reduce the burdens on small
entities that wish to seek similar treatment from the Commission. While
it remains unclear what effect the alternative choices we face in this
proceeding will have on small business entities, establishing this
rulemaking will create a full record upon which we can more capably
weigh these matters.
[[Page 69578]]
6. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
34. None.
Ordering Clause
Accordingly, it is ordered that the Notice of Proposed Rulemaking
is adopted.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 04-26385 Filed 11-29-04; 8:45 am]
BILLING CODE 6712-01-P